Digital Future: Predictive Advertising, Chapter 3: The Six Ways Bid Management Is Evolving

January 18, 2017 Andrew Park

In our third chapter on the future of digital advertising, we'll discuss how performance advertising is increasingly about more than just managing bids, and is also about smarter algorithms, faster optimization and platforms that are ecosystems unto themselves. Browse Chapter One and Chapter Two and stay tuned for future updates.

Digital Future: Predictive Advertising, Chapter 3: The Six Ways Bid Management Is Evolving

Marketing Was Then, But This Is Now
In the early days of online advertising, many of us were obsessed with direct response. And why not? Paths to conversion were linear. Cross-device challenges didn’t exist. Website user experiences were simple. There was a clear distinction between digital and offline marketing worlds. Advertisers had a clear path to ROI on platforms like Google AdWords and Bing Ads. Software platforms for bid management, assuming you used one, had a straightforward role to fulfill: campaign automation. Marketers did all the thinking. The tools just needed to act.

But today’s digital landscape is going through a profound transformation. When the first wave of bid management tools entered the advertising ecosystem, the iPhone was barely an idea. Today, smartphone penetration nears 80% in the US mobile market. In addition, we’ve seen new twists and turns with expanded lists of devices and platforms, including wearables, social media, location-based targeting and voice-based search. Simply put, the rate at which technology is changing is, quite frankly, outpacing innovation in the martech space. Try to name a tool that handles bid management...and also gives marketers a unified, cross-platform view of your audiences across social, search, mobile/call, and additional arenas such as display, and email. You can’t. It doesn’t exist. Yet.

Innovation in martech will happen through collaboration. The smartest minds in brand marketing, data science, performance marketing, and optimization will join forces to offer a new competitive edge in advertising. For instance, some platforms will remain strong for Google AdWords. But there will be an increased need for technology that presents a cross-platform, real-time customer view (yes, that’s a lot of buzzwords, but if you’re a marketer, you get it).

Here’s what the future of bid management looks like:

1. Predictive will create first-mover advantages.  
Bid management needs to be predictive advertising management. Marketing isn’t about single, direct-response actions anymore. You need to be able to reach your users with the right information, at the right time in their buyer journeys. You’ll do this with a predictive solution - one that knows where your prospects are, when they’ll be there and exactly how they’ll be searching for it. How does predictive advertising management work? It ensures that you’re using historical, cross-platform data to understand audiences on a personal level. By using a combination of massive amounts of empirical data to model demonstrated user behavior, and sophisticated calculations powered by data science to project user behavior in data-scarce markets, predictive advertising management will empower you to respond to publisher and ad network changes practically in real-time. 

2. Algorithms will become smarter. 
The proliferation of data has been tough on marketers. When signals are literally overflowing (and your martech systems are fragmented), it’s tough for campaign planners to make clear judgment calls about their target customers. Your algorithms need to help power your decisions. Yesterday’s decision engines relied on 5-8 data points to make judgment calls. With predictive advertising management platforms, first-party and third-party data allow for a wealth of insights—and more-accurate models, as a result. Advertising intelligence will replace bid management.

Digital Future: Predictive Advertising - We're past 5-8 data points now.
There’s more data now than ever before.

3. Optimizations will happen faster.
The PPC space is more competitive than ever. Countless marketers are clamoring for the same sets of audiences (and their ever-shortening attention spans). Ad auction models are becoming increasingly complex: it’s not about having the highest bids or Quality Scores anymore—the key to success with cross-channel advertising is strategic precision. The ability to achieve scale in marketing requires efficiencies with the minutiae. For instance, Dafiti, one of the largest e-commerce players in Latin America, manages 30 million keywords, 100,000 product groups, and $1M in monthly spend on AdWords. The company relied on a semi-automated process to manage these campaigns but recognized that more efficient options were available. Dafiti then transitioned to a rule-based platform that was capable of reacting to market changes and making changes to thousands of bids per day. Bid management fundamentals need to happen faster.

4. Platforms will be part of tech ecosystems. 
From email communication to social media management, many diverse responsibilities will fall on marketing. Meanwhile, cross-platform is becoming the new norm. Interactions are happening across more touch points. And technology will need to be more sophisticated, and more inclusive of different platforms and devices, to keep up. Much has been said about the rise of cross-device in e-commerce, for instance, and how the customer journey is no longer a simple matter of search to landing page to purchase. Statista has observed that 43% of tablet users, 35% of mobile users and 37% of desktop users have used multiple devices along their purchase journey. Monetate has observed that only 42% of online transactions occur in the first hour of a shopper’s browsing session; this means that more than half of all e-commerce transactions take more than an hour. In other words, more than half of all shopping transactions involve that increasingly roundabout journey between multiple platforms and devices as shoppers abandon items in their virtual carts and continue to perform research across merchant sites and social media before eventually deciding to purchase.

From Google to Facebook, Bing, and even Snapchat and Instagram, predictive advertising management platforms will be able to follow and optimize interactions. They will become even more powerful when they account for cross-device activity and alternate business models, such as e-commerce and SaaS-based subscription models. With an automation layer and through APIs, systems will share information on a regular basis. With this integrated view, marketers will be able to build more efficient campaigns.

5. Automation will become second-nature. 
We’re already seeing data being more of a guiding force for marketing decisions - Google reports that data-driven organizations are three times more likely to report significant improvements in decision-making. With the massive expansion in marketing data points, optimizing bids for millions of keywords must, by necessity, happen algorithmically, rather than manually. This is leading to an increasing dependence on having a functional technology stack through which your marketing data can flow - as MarTech today indicates, the marketing technology landscape has drastically expanded from some 150 in 2011 to close to 4,000 and growing. But with the increased reliance on technology to intelligently automate marketing campaigns, predictive advertising management will also pave the way for a future where marketers spend less time wrangling with spreadsheets and more time actually being marketers who can focus on strategy and growth.

6. Predictive advertising management will represent the intersection of storytelling and performance.
As part of the changing decision journey, consumers are crafting their own experiences. They’re not just running desktop searches - they’re on mobile or tablet, or using voice-based search such as Siri or Cortana. This is changing the way users find you - and emphasizes the importance of creating an engaging story whose shifting stages can be intelligently automated to handle the way that customers are more-frequently jumping back and forth between different stages of the traditional sales funnel. McKinsey found that among the Association of National Advertisers, 30% of top performers valued automation as being a crucial method of responding to the rapid change and disruption in the customer journey.

The Takeaway
With key aspects of their campaigns being automated, marketers will be better-positioned to answer the questions of who and where their prospective customers are, and how/why/when they want it. Rather than focusing on the minutiae of the day-to-day, they can prioritize optimization and growth. Predictive advertising management platforms will empower marketers to be creative and test new opportunities.

About the Author

Andrew Park

Andrew Park is a content marketing manager at QuanticMind. A UC Berkeley graduate and lifelong Bay Area resident, Andrew has done tours of duty in editorial, PR and marketing, and now works with the QuanticMind team to communicate the importance of data science and machine learning in digital advertising.

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